#DappCon22: Day 1 - A Decentralised Payment Ecosystem, Mattia Astaria Oleksiy Kurbatov

Transcript

uh so next up we have uh Matia pastarita and Stefan George Stefan is the co-founder of gnosis and working on gnosis chain and Matia is from Ali so they're going to speak to us about a decentralized payment ecosystem so excited to have them on um [Applause] okay so last week we released the first batch of self custodial debit cards they look like regular debit cards they feel like regular debit cards and they work

just like regular debit cards but you can link them to yourself custodial wallet and you can tap your crypto at any store today without giving custody of your funds to anyone else now this is the first time that we talk about our product in front of an audience so if you type early into Google you won't find much information yet cool so where are we going with this we are here to bring decentralization to a world that right now has centralized options which is the world of car payments and when we talk about bringing decentralization we simply talk about opening up the environment to much more

competition which ultimately leads to more benefits for the user now let me show you just how much it is needed in the world of payments ever since electronic payments was created it was never disrupted you may disagree with me right now so hear me out let's look at the evolution of payments on the front end and one thing you should know here is that the whole world of payments revolves around the world trust and evolution happens every time someone creates a more secure or more scalable way to create trust between the two and

two parties one of them being the merchant and the other one being the consumer so before the 1950s your trust was only local you would go to the local Merchant you would buy your groceries and then you would walk out and then you could decide to come back and pay later let's say at the end of the month this was an amazing experience but still very limited because what if you what if you went to another Merchant you couldn't do the same so in the 1950s someone created the Diners Club Card which is essentially a way to create trust between a bunch of wealthy individuals and a series of restaurants

right now you had this card you would walk into a restaurant you would show it and you had your meal and then you would walk out amazing but still very limited so Bank of America in the 1960s figured out a way to scale This Way Beyond just restaurants to pretty much every consumer and every Merchant that could possess one of these two one of them being the Bank of America Bank America and then the other one being the card in Printers this was very good in terms of coverage like at least a lot better but a lot worse in terms of processes because all of a sudden right now as a merchant you had to call a number get an

authentication code verify an ID get a signature use one of these machines and then you would have to collect all these pieces of paper and and send them by mail to the card schemes at the end of the month or at the end of the the day the week depends on how many you had so this logistical nightmare was solved by the mag stripe which solved all of this but it was still very vulnerable when it became to Signature fraud because you could sign Mickey Mouse and then you could come back and and and call and say that it wasn't you making the payment so then we evolved chip and pin NFC and then finally we arrived to the phone

I mean right now you have a way to know that it's you making the payment and nobody else just via VIA biometric authentication amazing and just when you thought or at least like just when I thought that we couldn't take this further than these guys came and these guys in my opinion are the Holy Grail of today's generation of payments I mean right now you walk into a taxi you don't know the taxi driver the taxi driver doesn't know you but you know that you're gonna get to where you want to go and the taxi driver knows that or trusts that you're going to pay and in the middle of it you're going to do what actually matters which is you

know developing a relationship talking about your life politics jobs whatever so how was payments how was payments not disrupted I mean like we we went from from that from the 1950s till right now well let's look at the back end so in the 1970s a bunch of banks got together to create the standards to do authentication clearing and settlement which is essentially a way for you to move file your funds around and in the case of Visa this were called Visa base one and Visa base 2.

base stands for Bank of America systems engineering if you guys recall the bank America during the previous slide Visa is a spin-off of Bank of America so now let's see what happens when you over the years so 1990s 2000 2010 and then the present I mean this is like this is insane this is like having the most amazing TV with you know LCD technology very thin but with 1973 resolution and let's put some data to it because let's put some data to it 90 of all

credit card transactions still rely on Mainframe and for those of you that are not familiar with mainframes or don't know what mainframes are essentially they're this big metal cabinets uh you know full of circuitry which were first released by IBM in 1969 and still Power 92 of the top 100 Banks in the world okay so how well okay so was payments really disrupted or was payments adapted on one side to talk to a bunch of all technology I don't know I'll let you guys I'll let you guys figure it out but the point here is what happens in the ecosystem when you have you know

Innovation only on one side in the this case on the front end this happens you go from a system that is originated to be like this it's the five party model to this essentially you have a bunch of aggregators orchestrators whatever else all these new players coming in to simply be in the mid between newer technology and older technology why because an iPhone cannot talk Mainframe right so what's the like what what do you think when every time a new player comes in into this giant Beast do you think all the other players go and say well you

know what it makes sense like here is a piece of my Revenue no it's added cost it's added cost for the merchant and who ultimately pays the cost of the merchants us the consumers so what's the true cost of all of this what's the true cost of you know banks that typically spend 80 percent of their I.T Budget on Legacy technology Legacy technology maintenance which another way to to to look at this is Banks spend 20 percent of their budget on Innovation or what's the true cost of University graduates that don't want to you know pursue a career in this space because you know like who wants to get out of

University and start you know start learning Kobo or Mainframe nobody well the true cost of this is hard to quantify but every single piece of paper from you know uh Wharton Berkeley's all those reputable universities linked to this it's negative GDP and the you know every inefficiency in the in the payment system or in the financial systems links to inefficiencies transmitted to smbs which by definition power countries economies so you have negative impact on GDP and another way of of looking at this in a more let's say more uh visual

way is every time a settlement takes three days to go from the merchant sorry from the consumer to the merchant account then the merchant will have lower working capital therefore lower money to innovate to expand and all of that and therefore negative GDP or all every time all these costs if you look at the bottom one are passed on to smbs then there's higher costs for the consumers cost push inflation negative GDP cool so what are we building okay so we're here to use this to use this self-custodial spending technology to build uh an

alternative payment Network one that leverages the the front end and then disrupts the back end why do we want to why do we want to leverage the back the front end is because if there's one thing that payments did right and for for all of us is the coverage I mean right now you have trillions of transactions going through multi-countries you have all the systems and that's what we want to leverage now I am going to pass the microphone to Stefan that is going to talk about how the system works and then he's going to address the

olifant in the room well company names is I found I was ready for this pun um of who are we I mean are we just another payment company uh how is it how do we position ourselves to achieve our mission and and what is it that we're going to be doing do you want a card yeah thank you Matthew um oh yeah I need this one the other one yeah who are we actually like maybe that's first step a little bit back like uh Bitcoin a peer-to-peer electronic cash system that's a title that Satoshi

Nakamoto uh was choosing for this yeah as title for the Bitcoin white paper and yeah the main application should be actually becoming a payments network uh store value digital gold you will not find this in the Bitcoin white paper however today I think you will not find any not even any uh Bitcoin maximalist who would argue that Bitcoin will become the globally accessible payment Network and the question is like why it's not only in a fault of Bitcoin in fact like we don't have any any actual like payment system touching the real world

running on blockchain today and over the last I would say five months since we kind of start talking to saltway I also became increasingly aware of like why this has not happened yet because it requires a lot of different skills actually to be able to accomplish a payment Network it's by far not only a technical challenge but it's about understanding how today's payments work how payments network works which parties are involved and having relationships with all of those parties to make them aware of a new potential solution and you need teams that understand both sides right that understand the

traditional payment side and understand the tech that's where tangent comes into play so tangent has uh has has been building these cards uh knows exactly how they integrate into the existing payments world but they also understand uh how to build ships they understand how blockchain works and they are kind of the the connection between the old world of salte sorry and the new world uh which is yeah it's kind of a blockchain infrastructure which now obviously nurses also provides and yeah like as a result of this joint venture over the last uh a couple of

months we have now this card that Matthew already showed to you which on the surface looks like an ordinary like credit card however it also is a hardware wallet so all of those cards have a hardware wallet integrated and they allow you to do payments in crypto so this card allows you to direct the like credit card payments as you're used to so it doesn't really disrupt your experience however everyone who has this card also has potentially an account or noses chain and can use crypto to actually pay for Via transactions so how does this work under

the hood so with Tangent or with the reader protocol there's actually like like a field in the video protocol where you can send um arbitrary data and tangent started using this to transport uh like signatures like blockchain signatures over the Visa Network to settle payments and when our user is actually going to a coffee shop and wants to pay he can use this card he can he can just do regular payment and can confirm this on a small iPhone and this will like sign in a blockchain transaction a nurses chain transaction which is sent over the Visa Network then like the part which is

about the exchange is actually uh like sent to an exchange like that this can be operated by us or another entity which allows to convert the crypto to Fiat if the merchant only wants to have uh yeah if the merchant only accepts fears and um yeah and of course ultimately we want to have a peer-to-peer system so the ultimate goal obviously is to allow the the customer to directly pay the merchant and yeah eventually just go straight over over and also's chain or other blockchains and yeah I think that's kind of the Revolution here because we don't disrupt

the user experience we are able to distribute Hardware wallets to thousands hundred thousands maybe millions of users without them even knowing and then eventually turn them into actual crypto users and make them aware of the opportunities that there are if they're actually using blockchain and for me it's kind of similar to the time when we started using Skype I guess many of you have been using Skype in the past I was one of the first users and it allowed me to do calls uh with other like friends without having to use the landline or the mobile phone and at some point Skype developed Skype out and Skype in which allowed you to do phone calls from Skype into

yeah into the regular phone network and vice versa and today like pretty much every communication we do is all done over the internet and I think this year is kind of the same inflection point where now we have the opportunity to use the old infrastructure to actually do crypto payments and then hopefully in the future all of these transactions will actually be done over blockchains and yeah that's why I think this card is such an important piece to the overall story and a nice segue to yeah to onboard potentially millions of users uh to what we are doing thank you yeah so

okay so are we open it up for question so if you hold any assets on knows this chain right now well here we put a cure code for you to get early access to the cards of course like you can find us after to uh you know to speed up the the card maybe you can convince one of us to give you the cards right now but yeah that's it um any questions where is it hi um can you break down a bit like coming

from the merchant point of view like how it would look like if a new Merchant one showed up this payment process right yeah so at the beginning the great thing is nothing has to change for the merchant to accept like a crypto transaction because in fact if the merchant only cares about fear it will still be converted for him and so he doesn't care to convert the merchant into into an actual crypto user that requires more education um they also thought pay comes into play probably most of you have never heard about saltpay it was the same for me I never heard about this company because they because they are mostly a company serving Merchants so like you have very

much so the emotional perspective maybe yeah that's a that's a key question to like the this this joint venture is that the sole pay group and I started there uh three years ago when we were very small and then right now we we became like 2 000 plus people and all that but we have access to uh 500 000 merchants in Europe and if you look at the group overall actually we have uh 1.5 million something like that but the whole idea is the sales strategy there is you cultivate our relationship with the merchants so you you as a sales agent you have routes every day then you go and you talk to the merchant you know how many kids they have you know you

know you go play soccer with them and that's that's how we expanded that's that's how we came very very big so the whole idea of Education will be good on on the crypto space will be conducted by the field agent onto the merchants right now the merchant you know doesn't need to know anything about crypto when you spend they're going to receive you know their funds in in Fiat but later on it's just a matter for us to push an application onto the terminals onto the POS which are Android based they are so it's just a matter of pushing something and then the moment that they want to activate they have a button that they push in their merchant portal and they

have this so yeah there's going to have to be a lot of education on the on the merchant side for sure that that we expected but I hope that answers your question yep right heck yeah yeah my question is will there be privacy in the protocols but the thing to criticize about credit card payments is that it's uh you leave a data trail yeah good question so the first version will not have like the this kind of MVP that you're launching doesn't have uh this privacy feature yet but of course

like uh we would like to enable this and from technological perspective that can be solved so yes you want to make a call of the core protocol yes it's very important like we don't want to make your payments public to anyone so unfortunately I think we have to cut questions there but maybe people can find you afterwards is that what's that maybe people can find you afterwards if they have more questions awesome always welcome thank you guys thank you